Residential Earthquake-prone Building Financial Assistance Scheme

Last updated: 25 January 2023

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The Residential Earthquake-prone Building Financial Assistance Scheme (the Scheme), which was announced in Budget 2019, will help unit owner-occupiers in residential earthquake-prone buildings facing hardship over earthquake strengthening costs – particularly those in areas of high seismic risk.

The Scheme is being delivered and managed by Kāinga Ora – Homes and Communities on behalf of the Crown. To apply for the Scheme visit the Kāinga Ora website.

This page has been updated following the outcomes of the 12-month review of the Scheme and confirmation that loan recipients may continue to access their existing Work and Income accommodation supplement.

Applicant eligibility

Applicants must:

• be a New Zealand citizen, or ordinarily resident in New Zealand, or overseas persons allowed under the Overseas Investment Act 2005
• be an owner-occupier of that household unit for the duration of the loan, or a former-owner occupier (on the condition that the applicant returns to live in the property or sells within two years of the property being removed from the EPB register)
• demonstrate:
  • the inability to obtain finance for EPB seismic retrofit from a Reserve Bank of New Zealand registered bank or non-bank deposit taker; or
  • where finance from one of the above entities can be obtained it is conditional upon the unit being sold when the building is no longer earthquake-prone; or
  • where finance from one of the above entities can be obtained, but would cause the owner significant financial hardship.
• have an adequate financial standing, based on not being:
  • in default of a mortgage, charge, or another security
  • subject to a Court Order or Tenancy Tribunal Order
  • currently insolvent.

If you receive an accommodation supplement from Work and Income, this will not be impacted by a loan granted under this Scheme.

Unit and building eligibility

• The Scheme will be limited to units purchased before 1 July 2017 or units purchased prior to being confirmed as earthquake-prone.
• The unit must be within a building in an area of high seismic risk and which is two or more storeys and contains three or more household units (or is a household unit within a mixed use building).
• The unit must be within a building where the relevant territorial authority has issued a earthquake-prone building notice.

Loans

• Loans are only for seismic retrofit to achieve seismic performance up to 100% New Building Standard (NBS) - ie no more than 100% NBS.
• The maximum loan secured against any one unit will not exceed $250,000 (but with limited discretion for the Chief Executive of Kāinga Ora to approve amounts above this level on a case-by-case basis).
• Loans will become repayable on the unit’s sale, 12 months after the last owner’s death, if the owner moves out of the unit or if the borrower defaults. Borrower default refers to a situation where there is another mortgage on the property and the borrower defaults on that loan and/or they become personally insolvent or obtain a loan by deception. If the loan was granted while the owner was not occupying the unit, the loan also becomes repayable if the owner has not sold or moved back into the unit within two years of it being removed from the Earthquake-prone Building Register.
• The loan provides for voluntary loan repayments (with no early repayment fees).
• Loans will be secured by a mortgage, charge, or another security against the unit’s record of title (or equivalent).
• Applications to the Scheme will close on 30 June 2027.

Interest rate settings for the Scheme

• The below market interest rate for the Scheme will be set at 50 percent of the sum of the Reserve Bank's monthly average of five year fixed interest rates.
• The interest rates will be fixed for five years with rate reviews at loan anniversary and interest rates will be calculated daily and compound annually.

12 month review

MBIE completed a 12-month review of the Residential Earthquake-prone Building Financial Assistance Scheme in October 2021, which was informed by targeted consultation undertaken during July and August 2021.

The review aimed to find out whether the current settings of the Scheme are working to achieve the Scheme's objective and intent.

It found that most settings are still aligned with the Financial Assistance Scheme's objective, but some require refinement to help the Scheme achieve its intent.

Recommendations in the review report have informed Cabinet's decision to expand eligibility for the Scheme and adjust some Scheme settings.

The table below shows the Government's response to the review's recommendations:

MBIE will continue to monitor uptake of the Scheme to ensure it is achieving its intent and identify what additional support could be provided to support compliance with the earthquake-prone building requirements.

Residential Earthquake-prone Building Financial Assistance Scheme 12-month Review - mbie.govt.nz